Sustainable Retail: Returns simply won’t go away
Welcome to the latest sustainability column that takes a look at what retailing is doing to address the issues in its industry. Much of the ongoing focus will be on fashion but not exclusively.
This month’s column considers the returns conundrum that simply keeps on coming back – onto the agendas of retailers.
We are very pleased to bring this series of columns to you with the much appreciated support of our sponsor Prolog Fulfilment.
If there is one thing in the retail sector that just won’t go away it is the issue of returns. The precarious margins of many fashion retailers – notably those at the faster end of things – has meant the historically rigid stance of offering free returns has placed increasing pressures on many businesses.
They have been reluctant to introduce charges because of the numerous surveys from solution providers that suggest charges will kill their business and then there is the invariable backlash from consumers.
Pretty Little Thing took the hit a few weeks back when it announced it was to introduce a £1.99 fee for returns – including those on its £9.99 unlimited free delivery for a year package. However, any negative feedback is now very much diluted because such actions follow in the path of a growing number of retailers that have introduced fees for returns including H&M, Zara, PLT parent company Boohoo, Uniqlo and Next.
PLT must have quickly found the £1.99 fee was insufficient to quell the return levels because this week it cranked up its defences further by deactivating the accounts of those users it deemed to have returned too many products. They were immediately notified that they could no longer transact with PLT.
Needless to say, complaints abounded as customers took to social media to say they had hardly returned anything so there must be a mistake. Others blamed their return volumes on PLT’s inconsistent sizing.
Either PLT has made a very bad mistake with its data analysis in identifying the offenders or it is simply a case of customers naturally being outraged even though they truly are the offenders and their departure is therefore no loss to the company. Either way, it is easy to see the sensitivity around this scenario. There will invariably be some grey areas.
The problem for all fashion retailers is that returns have become an even greater feature of the sector of late. PLT like many retailers including Asos (at the value end of the market especially) has found it hard to handle the volume of returns that had escalated as a result of the rise of Buy now, pay later solutions. These products have driven customers to buy more than they normally would, and to try different sizes and colours, without any money leaving their bank account. The propensity for returns has not surprisingly been magnified.
On top of this retailers are having to deal with the issue of fraudulent returns activity. As many as 38% of shoppers admit to having either engaged in return policy abuse or fraudulent behaviours in the past 12 months or know of someone who has, according to research from Loop Returns.
The company also found that 43% of those 38% of shoppers claimed they purchased items with a credit card that was not their own, and then attempted to have the refund processed to their own credit card. Let’s just take a step back here and consider that this equates to as many as 16% of the people surveyed. It’s an incredible figure and highlights just how tough it is for retailers to get some sort of control over their returns – both the legitimate and fraudulent varieties.
This is but one challenge around returns for retailers because there is also the growing spectre of EU legislation that will hold them to account with how they handle their returned goods. However, Jemma Tadd, head of fashion at eBay, reckons there could be an opportunity for retailers here. They can not only hit their sustainability requirements but also generate some revenues from returned goods that cannot be sold at full price if they partner with trusted marketplaces such as eBay.
This is some positive news at least but right now simply getting a handle on the returns volumes is still very much a work in progress for many retailers. Charging and banning customers are options but the ramifications have to be understood. However, doing nothing is probably not really an option for the longer term.
Glynn Davis, editor, Retail Insider
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